Sonko by-passes MCAs vote on Sh17bn taxes

Nairobi Governor Mike Sonko’s administration has gazetted a commencement date for taxes introduced in this year’s Sh32.5 billion annual budget, effectively bypassing the County Assembly’s debate and vote on the new levies.

Nairobi County Finance and Economic Planning Executive Charles Kerich has in a legal notice to the Assembly indicated that he will use the Nairobi County Provisional Collection of Revenue Act of 2013 to effect parts of the Finance Bill 2019 before debate and vote by MCAs.
“In exercise of the powers conferred by Section 2 of the Nairobi County Provisional Collection of Revenue Act 2013, the County Executive Committee Member for Finance and Economic Planning orders that all provisions of the Bill relating to taxes, fees, charges, levies and penalties shall have effect as though the Bill were passed into law,” reads Legal Notice 3.

The notice adds that Nairobians were to start paying the new taxes effective 19th July 2019, but the Sonko administration is yet to instruct its officers to start their implementation.

They include increased parking fees, new charges for garbage collection, fire certificates and inspection for cats and dogs.

Parking fees

Under the Finance Bill 2019, Nairobians will pay Sh400 parking fees up from Sh200, a fire certificate fee of Sh2,000 per annum for all city households, Sh1,000 in health inspection fee for every dog and cat and between Sh100 to Sh600 for garbage collection for all homes.

The Clerk of the County Assembly, Jacob Ngwele, Thursday confirmed that the new charges have taken legal effect even though Nairobians have continued to pay the taxes adopted in the Finance Bill 2018 because City Hall has not yet started enforcing them.

“They came to effect the day it was published. We have seen similar moves at the national level where some taxes change when the minister reads the Finance Bill. It is just a question of implementation by the county, it is up to them,” Mr Ngwele said Thursday.

Move 'illegal'

MCAs have, however, opposed the implementation of the taxes before their debate and adoption, terming the move as illegal.

“We have said that there is an Act allowing them to provisionally collect fees and charges. But a similar one was challenged and declared unlawful… it is unconstitutional, only that no one has challenged it, so according to us, the notice is null and void,” said Chair of the Budget and Appropriations Committee Robert Mbatia Thursday.

MCAs have in the past approved taxes or amended others as proposed by the executive arm of the county government.

In November last year, they slashed parking fees to Sh200 from Sh400 proposed in the budget, cut yellow fever jab charges to Sh2,000 from Sh2,500 and rejected recommendations to introduce garbage collection fees for all households.

The ward representatives have until September or 90 days from the day the Finance Bill 2019 was gazetted to approve or amend the tax proposals as the Sonko-led administration seeks Sh17.32 billion in own collections.

New taxes

City Hall is seeking to raise an additional Sh1.8 billion through the new taxes to realise its target for the year ending June 2020 up from Sh15.5 billion it had targeted in the 2018-19 period.

Nairobi generated Sh8.24 billion in own revenues in the first nine months of the financial year ended June 2019, out of a full-year target of Sh15.5 billion.

Under the Nairobi City County Provisional Collection of Revenue Act of 2013, City Hall can collect taxes under a provisional arrangement of up to six months. The County Assembly can, however, extend the period.

Mr Kerich declined to comment on the notice that effectively increases taxes besides new charges to be paid by Nairobians in the period to June next year.

“I'm not in a position to do an interview, I can’t respond to that notice, not now,” said Mr Kerich in a terse response.

Fire certificate

The notice effectively means that for the first time Nairobians will pay for a fire certificate and garbage collection and inspection fees for their pets.

Guest houses, hotels, shops and other businesses will pay charges of between Sh2,500 and Sh60,000 per facility based on their capacity under the Finance Bill 2019.

City Hall increased by six times occupation certificates for buildings from the current Sh5,000 paid annually to between Sh15,000 and Sh30,000 in what could add inflationary pressure on rent and service charges.

The county government also introduced new charges that include Sh1,000 for a medical examination booklet and Sh3,000 for pest inspection per business.

Nairobians will pay more in property rates starting next January after City Hall adopted a new valuation roll that increases the fees from a range of 25-34 percent of the property depending on its location.

The new taxes come even as City Hall eyes increased collections to improve service delivery in health, construction of roads and build more markets for informal traders currently in populous areas like Gikomba where facilities are stretched.